Unit 2 Manufacturing Operations

Sections:

1. Manufacturing Industries and Products

2. Manufacturing Operations

3. Production Facilities

4. Product/Production Relationships

5. Lean Production

6. Manufacturing Metrics Manufacturing Lead Time Rate of Production Production Capacity Work in Progress Design Times Utilisation/Availability

Industrial AutomationArchitecture

Transformation ProcessRaw

MaterialPart or Product

PowerTools

MachinesLabour

Scrap or Waste

Level 0

Level 1

Level 2

Level 3

Level 4

Industrial Automation(Shop Floor)

Business Information(Business Office)

Manufacturing Lead Time

RawMaterials

Work inProgress

FinishedGoods

Transport

MachineGroup

Stores Inspect

•Operating Times•Non-operating Times

Manufacturing Lead Time

Time

95%Moving and Waiting

70%Positioning, Loading

5%On Machine

30%Cutting

1.5% of total time - adds value

e.g.Set-up Time

Manufacturing Lead Time

Operation TimeNon-operation Time

n1n1 n2n2 n3n3

Time

To = Operation Time per MachineTno = Non-operation Time per Machinenm = Number of Machines

MLT = nm ( To + Tno )

Manufacturing Lead Time

Q = Number of parts

MLT = nm ( QTo + Tno )

n1n1 n2n2 n3n3

Pallet of six parts

Manufacturing Lead Time

n1n1 n2n2 n3n3

Pallet of six parts

Tsu = Set-up Time

MLT = nm ( QTo + Tno + Tsu )

Manufacturing Lead Time

Order #1

Order #2

Process Plan (Routing)

Manufacturing Lead Time

In practice

Q, Tsu, To, Tno and nm will vary considerablyfor different order quantities, process routing to find average or aggregatevalues before carrying out analysis. e.g.:

QQi

i1

nq

nQ

Operation Times

Operation time has three elements:

Tm = Actual Machining TimeTh = Workpiece Handling TimeTth = Tool Handling Time

To = Tm + Th + Tth

Rate of Production

• Total Batch Time per Machine

Tsu + QTo

• Average Production Time per Part

Tp = Tsu + QTo

Q

• Rate of Production

Rp = 1/Tp

Lead Times

MLT (Tsui QToi Tnoi)i1

nq

MLT (Tsu QTo Tno)nm

MLT (Tsu To Tno )nm

Mass Production (Tsu + Tno -> 0)

MLT nm(TransferTime Longest(To ))MLT nmQTo

Job Shop (Q -> 1)

Production Capacity

Production Capacity, Pc

Pc = WSwHRp

W = number of work centresSw = Number of shifts per weekH = Hours per shiftRp = Rate of production (units per hour)

If process plan requires Nm machines:

Pc = WSwHRp / Nm

Demand Rate

Weekly Demand Rate

Dw = WSwHRp / Nm

WSwH = DwNm/ Rp

Three ways of adjusting capacity

W (number of work centres)Sw (number of shifts per week)H (number of hours per shift i.e. overtime)

Work In Progress

WIP : Amount of product currently locatedin the factory that is either being processedor is in between processing operations

Generally:

WIP = PC U (MLT) / Sw H

WIP Ratio

WIP Ratio = WIP / Number of Machines Processing

WIP Ratio =

PC USw H

(MLT)

W UQToTsu + QTo

Ideal ratio: 1:1

Worked Problem

The average part produced in a certain batch manufacturing plant must be processed sequentially through six machines on average. Twenty (20) new batches of parts are launched each week. Average operation time = 6 min., average setup time = 5 hours, average batch size = 25 parts, and average non-operation time per batch = 10 hr/machine. There are 18 machines in the plant working in parallel. Each of the machines can be set up for any type of job processed in the plant. The plant operates an average of 70 production hours per week. Scrap rate is negligible. Determine (a) manufacturing lead time for an average part, (b) plant capacity, (c) plant utilization. (d) How would you expect the nonoperation time to be affected by the plant utilization?

Solution

(a) MLT = 6(5 + 25(0.1) + 10) = 105 hr

(b) Tp = (5 + 25 x 0.1)/25 = 0.30 hr/pc, Rp = 3.333 pc/hr. PC = 70(18)(3.333)/6 = 700 pc/week

(c) Parts launched per week = 20 x 25 = 500 pc/week.Utilization U = 500/700 = 0.7143 = 71.43%

(d) As utilization increases towards 100%, we would expect the nonoperation time to increase. When the workload in the shop grows, the shop becomes busier, but it usually takes longer to get the jobs out. As utilization decreases, we would expect the nonoperation time to decrease.

Utilisation

PC

Q

Utilisation, U = Output/Capacity

Utilization: U =

where

Q = quantity actually produced

PC = plant capacity

Availability

Availability: A =

where MTBF = mean time between failures, and MTTR = mean time to repair

MTBF

MTTRMTBF

Costs of Manufacturing Operations

Fixed costs - remain constant for any output level Variable costs - vary in proportion to production output

levelAdding fixed and variable costs

TC = FC + VC(Q)where TC = total costsFC = fixed costs (e.g., building, equipment, taxes)VC = variable costs (e.g., labor, materials, utilities)Q = output level

Costs

Quantity, Q

Method 1:Manual

Method 2:Automated

Breakeven Point

FC2

FC1

VC2

VC 1

Breakeven Point

Manufacturing Costs

Alternative classification of manufacturing costs:

1. Direct labor - wages and benefits paid to workers

2. Materials - costs of raw materials

3. Overhead - all of the other expenses associated with running the manufacturing firm Factory overhead Corporate overhead

Overhead Rates

Factory overhead rate:

FOHR =

Corporate overhead rate:

COHR =

where

DLC = direct labor costs

DLC

FOHC

DLC

COHC

Cost of Equipment Usage

Hourly cost of worker-machine system:

Co = CL(1 + FOHRL) + Cm(1 + FOHRm)

where

Co = hourly rate, €/hr

CL = labor rate, €/hr

FOHRL = labor factory overhead rate

Cm = machine rate, €/hr

FOHRm = machine factory overhead rate

Worked Problem

The break-even point is to be determined for two production methods, one a manual method and the other automated. The manual method requires two workers at €9.00/hr each. Together, they produce at a rate of 36 units/hr. The automated method has an initial cost of €125,000, a 4-year service life, no salvage value, and annual maintenance costs = €3000. No labour (except for maintenance) is required to operate the machine, but the power required to run the machine is 50 kW (when running). Cost of electric power is €0.05/kWh. If the production rate for the automated machine is 100 units/hr, determine the break-even point for the two methods, using a rate of return = 25%. The solution requires familiarity with the Uniform Annual Cost (UAC) method of determining an annual amount payable (A) on a principle sum (P).

Solution

Manual method: variable cost = (2 workers)(€9.00/hr)/(36 pc/hr) = €0.50/pc Total cost as a function of Q is TC = 0.50 Q assuming no fixed costs. Automated method: (A/P,25%,4) = = (0.4234) UAC = 125,000(A/P,25%,4) + 3000 = 125,000(0.4234) + 3000 = €55,930/yr Variable cost = = 0.025/pc Total cost as a function of Q = 55,930 + 0.025 Q Break even point: 0.50 Q = 55,930 + 0.025 Q, 0.475Q = 55,930, Q = 117,747

pc/yr Hours of operation per year: Manual: H = = 3270.76 hr/yr. Comment: This would require two shifts. Automated: H = = 1177.47 hr/yr. Comment: Plenty of additional capacity in one shift beyond the break-even

point.